R $($ the writer or the grantor$)$ grants an option to E $($the holder$)$ under which E may $($but is not obligated to$)$ purchase $100$ shares of the stock of X Corp. from R for $$10$ per share at any time within six months after the option is written. When the option is written, E pays a $$premium$$ of $$50$ to R$.$ What are the consequences to R and E in the following alternative cases?

a$.$ E exercises the option when the stock is worth $$14$ per share by paying the option price of $$1,000$ to R$.$ R conveys to E $100$ X shares that she purchases at $$10$ per share when the option was granted.

b$.$ Same as $($a$),$ except that R purchased the stock years earlier for $$5$ per share.